All Forum Posts by: Andrea Castor

That's why I am asking......because it seems to mark every other box EXCEPT the 70% rule. Is it still okay for move forward? I'd still be really happy with the returns...

Long story short, I have one gifted child (2nd grade), one "inclusion class" child (1st grade) and two more that will enter school in the next 3 yrs. Although we live in an excellent school district, its very large and isn't the dream we pictured raising a family. We are looking at moving to a neighboring small town, with about 3,000 people. We've met with the schools, we know its where we want our kids to be. The issue is getting into this town. Realtors have already told us contingent offers are rarely accepted, most properties sell within the first couple days and we have seen evidence of this as we've watched over the past year.

Rental prices are high at $1200-$1500 for a 1300-1500 st ft duplex. We really don't want to waste our money paying rent while we find a deal or building. Instead I've thought about the idea of buying something in this sq ft range and making it a rental after we build in 1-2 yrs. The issue is that we will have to pay fair market value.

Currently looking at two different properties, both have been on the market awhile because they are overpriced. Realtor is confident we can get them down with comp numbers. So not only would we save paying rent during the time we build, BUT, they'd make incredible rentals even at fair market value.

The numbers...

House #1 - 3 bed, 1.5 bath 1200 sq ft SFH - cost $105,000 20% down 4.5% = $426/mo Cap Rate 18.5%

House #2 - 3 bed, 2 bath 1500 sq ft SFH - cost $131,000 20% down at 4.5% = $531/mo Cap Rate 20.6%

I understand the risk with not having another exit strategy besides renting may not be ideal. Both are done to "rental standard" finishes so there would be some room to make a bit of money if we put in higher end stuff. Plus, the added benefit of saving upwards of $36,000 in rent over 2 yrs.

Does it still make sense? Our timeline is kind of crunched if we want our youngest in their preschool...

We plan on coming this month! May be bringing a friend or two as well. :) Will let you know for sure.

We are working with a new realtor, although he has experiencing with investments of his own. We're extremely picky and have never been impressed with a realtor ever, and we really like him. He's always as excited to see the property as us, gives us good/prompt reports/comps, timely in making offers and on our requested terms. I've suggested him to several people.

These stats look pretty similar to the condos we have bought. 2 bed, 2 bath.....sell for around $95k. I bought mine at $65k rehabbed and another $49K and put $12k in it. We rent for $975 and $1000/mo (sold in Nov for $89,900). Condo fee is only $150/mo though but no pool/club house. These are in A+ neighborhoods.

Personally, I would never buy anything with PMI. That's just a person thing for me, but I scrimped and saved for my first place just so I didn't have to pay that. In our area you could move to a B-/C neighborhood and find something small for around $500/mo. Whatever you can find cheap. Save those bonuses, save every dime for your paycheck you can.

At that point, the condo idea would be ok IF you are still following the 70% rule. Buy at a discount, especially important with condos, and personally I think easier to find because people in condos at least in our area have gotten desperate (bought high, value tanked, they are stuck and wanting to "move on" in life).

Three other things to be sure to look at......one, how long do the condos typically take to sell. Our complex is one of the most well run ones in the area, great location and neighborhood, very few renters, and yet it takes them some time to sell. Two, is the HOA fee comparable. $270/mo in our area would be extremely high but $150 is one of the lowest. Lastly, get a copy of the bylaws. Some bylaws state you can't even rent them out (brings down property value and limits your exit strategy).

Our first two deals kind of came to us when we were least expecting. The first was in 2012 when we'd just had our 3rd baby. We were 27 and didn't exactly have a ton of money just laying around. Banks were super tight, especially with loaning money for a condo as a 2nd property. My mom was a realtor at the time though and said it was such a good deal, foreclosure with a local bank, and sat for 6 mo without needing any work, so they loaned us the money. Bought right at a 70% discount already rehabbed. Rented quick at $900/mo (now $1000/mo).

The 2nd property came a year an a half later in the same condo complex. Another investor in the complex called us when it hit the market. It needed substantial rehab but were in a dire situation so the numbers worked out. Got for about 65% discount even after rehabs and rented $1000/mo before the renos were even done.

Now that we've decided to really do this real estate thing as a business, we have the cash ready to go and cannot close a deal to save our lives. It's been 2 mo now, we've seen maybe 30 properties, made offers on about 8 and been outbid on every single one. We are working with a new realtor, but he's been great (and we have really high expectations). Plan on attending a local real estate investing meet up in our area in Feb but we may have to change our strategy to BRRR now instead of just flipping too.

I had my first "emotional" no a couple months back. We had a property on the market to sell but as it was getting close to winter, we were planning on taking the property off the market and trying again in the spring. Military family came to us, would make GREAT renters, but they only wanted a 3 mo lease. I was fine with that since I wanted the place back on market in 4 mo anyway. All was going to work out perfectly. Until we got an offer (for asking) the day they did their smartmove application. There was no signed agreement, I had been very clear our ultimate goal was to sell, and the property was still on the market. She was REALLY mad, pregnant and saying I put her in the hospital for stress to the baby, all kinds of harsh words. At the end of the day, I helped her find another rental even after all the nasty words, BUT, I had to do what was right for me. Tough sometimes...

I've experienced first hand the troubles on financing a condo as a rental period. When we bought our first property in 2009 we had to take a loan from family. We hated this idea but after talking to 12 local banks, it was our only option. Thankfully, we bought another condo in the same complex in 2012, banks eased up a bit and we were able to cash out refi, finance on both together saving on closing costs. We've learned the hard lessons of HOAs (letters about work trucks parking an 1") on the grass, sports "memorabilia" on the porch (it was a decorative plantar), etc. 

For this condo we have requested a copy of bylaws. Asked to see their financials and trying to talk to property manager. We *think* it's the same as our other properties. My biggest worry is that there is a special assessment coming up we don't know about and for an exit strategy whether they qualify for FHA financing (our other condos don't so hurts resale). We still managed to double our money on one though (purchased $42k and sold for $88k 2.5 yrs later).

Well the husband finally got inside to take a closer look. Substaintial dog damage. Even at close to asking price and with $10k in total rehab (rental comps do not require high end finishes) and a low $750/mo rent, looking at a cap rate of 16%.

Yes, exit strategy could always be to sell, most likely with owner financing or rent to own type thing, but this is more something we plan to hold at least 5 yrs but more like 20-30 (we are 32). We are not new to rentals but new to renting in this area.

Only comps:

2 bed, 1 bath 910 sq ft $42,500 12/2015

2 bed, 1 bath 910 sq ft $36,000 10/2015

2 bed, 1 bath 910 sq ft $45,900 7/2015

3 bed, 1 bath 1222 sq ft $48,000 4/2015

HOA fees, I'll admit, I typically do not like. Our other two rentals also have HOAs ($150 including trash only, no pool/clubhouse, just snow/lawncare/etc. BUT, HOA is $165/mo again, doesn't include a pool, club house, tennis courts. But, even with HOA $165/mo and taxes $120/mo I still like this deal...